Dothan, Ala., Movie Gallery announced Tuesday that it has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to realign the company's business operations and restructure its debt.
Joe Malugen, chairman, president and CEO of Movie Gallery, said the chain needs to realign its cost structure due to the ongoing changes in the industry.
“Although the company has taken numerous steps to reduce its debt and strengthen its balance sheet through closing unprofitable stores, headcount reductions and other means, these actions were not sufficient to offset the significant shift in our business and the cost of our substantial debt obligations,” Malugen said. “After careful consideration of all available alternatives, the company's Board of Directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring.”
Movie Gallery's Canadian subsidiary was not a part of the filing and will continue operating outside of the Chapter 11 cases.